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Soaring tech puts Nasdaq on track to record opening

The New York Stock Exchange is pictured in the Manhattan neighborhood of New York, New York, United States, on April 16, 2021. REUTERS / Carlo Allegri

  • All eyes on the Fed minutes at 2 p.m. ET
  • Didi falls as China fines him over illegal merger deals
  • Futures: Nasdaq up 0.57%, Dow flat, S&P up 0.13%

July 7 (Reuters) – The Nasdaq was expected to hit a new high at the opening on Wednesday as lower Treasury yields lifted tech-heavy growth stocks, while investors focused on the debriefing of the Federal Reserve of the June meeting to assess the trajectory of political support going forward.

The yield on US 10-year bonds slipped for the seventh consecutive session to a new 4.5-month low, while the mega-cap tech is called Facebook Inc (FB.O) Apple Inc (AAPL.O) , Alphabet Inc (GOOGL.O) and Inc (AMZN.O) gained between 0.5% and 0.8% in pre-market trading.

Fast-growing tech stocks are sensitive to returns because their value relies heavily on future earnings, which are discounted more deeply when bond yields rise.

On the other hand, rate-sensitive banking stocks, notably Citigroup (CN), Goldman Sachs (GS.N), JP Morgan Chase & Co (JPM.N), Wells Fargo (WFC.N) and Bank of America (BAC .N) declined slightly, adding to the strong losses from the previous session.

The minutes of the Fed’s latest policy meeting, scheduled for 2 p.m. ET, should offer clues as to how the US central bank could start cutting back its massive bond-buying program amid signs of acceleration economic recovery. Read more

“Everyone will be looking at them (minutes) to see when that reduction might begin, especially after the hawkish tone of the meeting itself,” said Chad Oviatt, director of investment management for Huntington Private Bank in Columbus, Ohio. .

Wall Street has worried about soaring inflation, with investors shifting between economy-linked value stocks (.IVX) and growth stocks (.IGX) in recent sessions.

The S&P 500 growth index is now up 16.3% over the year against an increase of 14.8% of its value counterpart, outperforming the latter after more than five months of underperformance.

The Dow (.DJI) and S&P 500 (.SPX) fell on Tuesday, with financials and other groups closely tied to economic growth leading to declines, while the Nasdaq (.IXIC) posted a second record high of consecutive closing.

“We’re going to continue to see this push and pull between growth and value as the markets try to determine whether we’ve hit a peak growth or peak policy,” Oviatt said.

“What we are suggesting is that we will see continued reopening efforts and that still presents a good backdrop for these valuable names.”

As of 8:32 a.m. ET, Dow e-minis were down 8 points, or 0.02%, S&P 500 e-minis were up 5.75 points, or 0.13%, and e-minis Nasdaq 100 were up 83.5 points, or 0.57%.

China’s market regulator says it has fined a number of internet companies, including Didi Global (DIDI.N), Tencent (0700.HK) and Alibaba (9988.HK) for failing to report the merger deals and prior acquisitions for approval. Read more

Didi’s U.S.-listed shares fell 3.9%, adding to a collapse of nearly 20% on Tuesday.

Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur

Our Standards: Thomson Reuters Trust Principles.

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